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Income Tax Appellate Tribunal, DELHI BENCH “G”, NEW DELHI
Before: SHRI. G. D. AGRAWAL & SHRI AMIT SHUKLA
O R D E R PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the assessee against the impugned order dated 27/3/2015, passed by the ld. CIT(Appeals)-19, New Delhi, in relation to the penalty proceedings under section 271(1)(c) of the Income Tax Act for assessment year 2009-10. In the grounds of appeal
, the assessee has raised the following grounds:-
1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the penalty on the amount of alleged sales tax penalty i.e. Rs.5,21,082/- and that too without appreciating the facts and circumstances of the case.
2. That in any case and in any view of the matter, action of Ld. CIT (A) in not deleting the penalty fully as levied by Ld. AO u/s 271(1)(c) is bad in law and against the facts and circumstances of the case.
3. That the assessee craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.
2. The facts in brief qua the issue of penalty under section 271(1) (c) are that, the assessee in the computation of profit & loss account has claimed an amount of Rs.5,21,082/- as sales tax penalty. In response to show cause notice in the assessment proceedings, the assessee had submitted that the said amount is not in the nature of penalty, but was compensatory in nature and the nomenclature of the expense does not determine the allowbility of expense. However, the Assessing Officer disallowed the said expenditure by invoking Explanation 1 to section 37 and held that it was clearly for breach of law relating to sales tax. Thus, he had made the addition of Rs.5,21,082/-.
3. In the first appeal, the assessee submitted that the said expense was in fact compensatory in nature and copy of relevant sales tax order was also filed along with certain judicial decisions in support of such claim. The ld. CIT (A) directed the Assessing Officer to examine the documents filed by the assessee and allow the expenditure, whether it is compensatory in nature or is penal in nature. However the AO did not give effect to the appellate order. Now penalty has been levied by the Assessing Officer on the said addition.
The ld. CIT (A) in the impugned penalty order had noted that the Assessing Officer was repeatedly requested to send the copy of the order passed giving appeal effect to the quantum appellate order for deciding the issue of penalty, however, the Assessing Officer did not file any reply, which fact has been noted by the ld. CIT (A) in paragraphs 4.2 and 4.3 of the impugned order. He also noted that since the appeal was pending since July, 2012 and the Assessing Officer was specifically directed to examine the documents filed by the assessee and allow the expenditure, whether it is compensatory in nature, which information the Assessing Officer has not given. The ld. CIT (A), instead of quashing the penalty order or deciding the appeal on merits, held that while giving appeal effect in the quantum order, if the Assessing Officer finds that the expenditure claimed is penal in nature, then only penalty should be decided. However, no concrete finding has been given based on the facts.
After hearing both the parties, we find that even at this stage, copy of order giving effect to the quantum appellate order by the ld. CIT (A) had not been furnished and the impugned order of the ld. CIT (A) in the penalty proceedings is again without any assertion of facts, whether the Assessing Officer had allowed this issue in favour of the assessee or not. Whence after expiry of more than four years from the date of ld. CIT (A)’s order dated 30.3.2013 in the quantum proceedings the Department has not given effect, then on this ground alone, we do not find any reason as why the assessee should be liable for any penal consequence.